FILE PHOTO: Shipping containers sit on the dock at a container terminal at the Port of Long Beach-Port of Los Angeles complex, amid the coronavirus disease (COVID-19) pandemic, in Los Angeles, California, U.S., April 7, 2021. REUTERS/Lucy Nicholson/File Photo
Port of Los Angeles and Long Beach Dwell Time Fees Were Start Today With More Than 48,000 Containers Dwelling Past Limit -UPDATE
The controversial new dwell time fees, which were set to start Monday at the ports of Los Angeles and Long Beach, have been postponed as more 48,000 containers are dwelling past the time limit. Ports says progress has been made.
Beginning today, the neighboring ports at the San Pedro Bay Port Complex, which combined handle about 40% of the nation’s containerized imports, were expected to begin assessing the “Container Excess Dwell Fee,” a cumulative per day charge to ocean carriers for lingering import containers at marine terminals.
The ports say the penalties will help clear terminals of backed up cargo amid record volumes and ship backlogs. Revenue collected by the ports, which could easily reach into the tens of millions, are supposed to be re-invested into “programs designed to enhance efficiency, accelerate cargo velocity, and address congestion impacts,” but the ports say that making money is not the primary goal.
The fee will apply only to import containers that remain at marine terminals for 9 days or more for containers scheduled to move by truck, and 6 days or more for those scheduled to move by rail, starting at $100 and increasing in $100 increments each day with no limit as long as the container remains.
That is, a truck-bound container will be assessed $100 on Day 9 at the terminal, $200 on Day 10, $300 on Day 11, $400 on Day 12 and $500 on Day 13, etc… The fee is cumulative too, so a container lingering 13 days will be subject to a charge of $1,500, as an example.
According to the Port of Los Angeles’ import dwell time report from Friday, there were 5,985 containers sitting at terminals for 9 to 12 days and a whopping 20,426 containers sitting at terminals for 13 or more days. Although the number of dwelling containers appears to be trending down (as of Nov. 1 there were over 31,000 containers dwelling for 13 or more days), between the two remain over 26,000 containers that would be subject to the fee. This means the Port of Los Angeles alone appears set to dish out $2.6 million in fines on day one of new policy, while increasing them amount each day a container is not removed.
At the Port of Long Beach, the numbers are equally startling. As of Friday, the port reported 17,314 truck-bound import containers sitting 9 or more days and 575 rail-bound containers, so there we’re looking at nearly 18,000 containers that will be assessed the $100 fee on the first day the new policy is implemented. (Updated numbers from both ports are included at the bottom of this post).
Combined, we’re looking at about 44,000 containers (Monday’s numbers point to over 48,000) that will be assessed a $100 charge starting on day 9, then $200 on day 10, $300 day 11, etc., until they are removed.
What’s not clear is how long are containers are lingering since Port of Los Angeles only discloses a 13+ number, while Long Beach highest number is 9+. We don’t know how many containers have lingered 14, 15, 16, 17 or more days.
Maersk addressed the fees in an update to customers on Friday saying it was aggressively working on developing solutions for customers, including securing additional land-side storage outside of marine terminals.
Who ultimately pays the fee is another issue. While the fee will be charged to the ocean carrier (even though cargo has already been removed from their ships), any penalties will ultimately be passed to the shipper (not the shipping company, but cargo owner) and therefore the consumer.
Maersk’s update includes an FAQ that states clearly:
Q: Who is responsible for paying this fee?
A: This Excessive Dwell Fee shall be billed directly to the Ocean Carrier under whose bill of lading a Container subject to the fee was discharged…” This means that the Ports are submitting the bill to Ocean Carriers to act as collection agent to charge those with a cargo interest in the laden import containers.
Q: As a customer of Maersk, should my container exceed the defined dwell times, will I be billed this fee?
A: Yes, should your container not be removed beyond the defined dwell times, Maersk will pass this cost onto all customers as the owner of the cargo that is dwelling on the terminal, resulting in the fee from the Ports.
While here we offer Maersk as just one example, other carriers are almost certain to the follow the same model.
Ultimately, it’s the Los Angeles and Long Beach port authorities who control and assess the fees, but the program was developed in coordination with the Biden-Harris Supply Chain Disruptions Task Force, U.S. Department of Transportation and “multiple supply chain stakeholders.” So, if you’re thinking the government will swoop in and end the program, don’t count on it. It’s up to the ports.
The ports also maintain that they have no interest in using the policy as a means to generate revenue. As stated in a Port of Los Angeles presentation on the program:
By no means is the intent of this amendment to generate revenue for the Port of Los Angeles. The purpose is to drive the removal of cargo from our terminals based on the charging of a dwell fee.
We hope the program is resoundingly unsuccessful in producing revenue. What we want here is a change in behavior amongst our partners, not to make money.
The less money this Tariff item makes and the more cargo that is moved off terminal premises, the better for all.
Remember, these fees will be on top of freight rates that have soared as much as 10 times during the pandemic, standard detention and demurrage fees charged by carriers, and all-time low schedule reliability. This is all to say, shippers are paying more for worse service.
It will be interesting to see what happens from here… How much will the charges amount to? Will the fees actually help move cargo more quickly, as advertised? How will shippers respond? We’re in uncharted waters here, so it’s really anyone’s guess.
It appears the number of dwelling containers actually rose at both ports over the weekend. Combined, more than 48,000 containers are now past the allowable dwelling times and subject to the $100 fines:
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